Mark Holyoake & Hotblack Holdings Ltd v Nicholas Candy (2016)

Summary

The court had jurisdiction under the Senior Courts Act 1981 s.37 to grant a notification injunction restraining defendants in an unlawful means conspiracy claim from disposing or dealing with their assets without prior notification. The injunction was granted as the claimants had demonstrated a good arguable case that there was a risk that the defendants might dissipate their assets.

Facts

The claimants applied for a notification injunction against the defendants.

The claimants had borrowed £12 million from six defendant companies to fund a property development. The first claimant alleged that after the loan had been made, he was bullied into a series of further agreements with the company, which was owned by the first and second defendants. The claimants brought a claim for unlawful means conspiracy. They sought the injunction, which required the defendants to notify them before disposing or dealing with their assets, because they were concerned that the defendants might dissipate their assets thereby making it difficult to enforce judgment against them if the claimants were successful; a freezing injunction was not sought.

The issues were

(1) whether there was jurisdiction under the Senior Courts Act 1981 s.37 to grant a notification injunction;

(2) whether it was enough for the claimants to show that there was a serious issue to be tried or whether they had to show a good arguable case;

(3) if the test was a good arguable case, what that meant;

(4) whether the claimants had shown a good arguable case on the merits;

(5) whether the claimants had demonstrated a risk of dissipation.

Held

1) In order to obtain a notification injunction, a claimant must either (a) assert some substantive right to prevent the defendant disposing of an asset; or (b) provide some credible evidence of a threatened dissipation of assets such as would justify a freezing injunction. The former was not argued in the instant case. In relation to the latter, if the court could grant a freezing injunction restraining disposal on the ground of dissipation, it was also able to grant a modified form of restraint which only restrained disposal if made without prior notification. There was clearly power under s.37 to grant a notification injunction even where the application did not ask for a full-blown freezing injunction (see para.8 of judgment).

(2) Although a notification injunction was in principle less invasive than a freezing injunction, it was still an invasive order. It justified more than a serious issue to be tried which, as appeared from American Cyanamid, only really served to cut out the frivolous or vexatious case. The principles underlying the grant of a notification injunction were closely tied to the principles underlying the grant of a freezing injunction, and what was needed to justify a freezing injunction in terms of the merits of the substantive claim was also needed to justify a notification injunction. Accordingly, the claimants needed to demonstrate a good arguable case (para.10).

(3) In the case of purely factual questions, it was sufficient for the claimant to meet the traditional test laid down in Ninemia Maritime Corp v Trave Schiffahrts GmbH & Co KG (The Niedersachsen) [1983] 1 W.L.R. 1412, namely that the claimant needed to show a good arguable case in the sense of a case which was more than barely capable of serious argument, and yet not necessarily one which the judge believed to have a better than 50% chance of success, The Niedersachsen applied (para.15).

(4) The particulars of claim detailed serious allegations. The claim, at the instant stage, was more than barely capable of serious argument, although not necessarily one which had more than 50% chance of success. There was a good arguable case that the defendants had engaged in threats and other unjustified behavior in order to secure a commercial advantage (paras 16-18).

(5) There was a real risk of dissipation against which the claimants were entitled to be protected. In reaching that conclusion the court had in mind an unexplained transfer of a very substantial property into the name of the second defendant's wife, and a discrepancy between the first defendant's purchase of a very valuable yacht and any apparent means for him to be able to afford it. It was also relevant that the proposed notification injunction was less intrusive than a freezing order; that was relevant to the degree of risk which needed to be shown before the court could be persuaded to intervene (para.47).